Exhibit 99.1
DPAC Technologies Gains Momentum in
Wireless Market as It Reports Fiscal Third Quarter Results
GARDEN GROVE, Calif.--(BUSINESS WIRE)--Dec. 23, 2003--DPAC
Technologies Corp. (Nasdaq: DPAC):
-- During the quarter, DPAC receives several design wins for the
new Airborne(TM) 802.11b wireless LAN Node module
-- Third quarter results reflect a non-cash charge of
approximately $6 million for the reversal of tax benefits
DPAC Technologies Corp. (Nasdaq: DPAC), a technology company that
provides a diverse portfolio of patented electronic component-based
products, including component packaging technology for high-density,
space-saving memory and wireless applications, today reported results
for its third quarter of fiscal year 2004, ended November 30, 2003.
Net revenue for the third quarter ended November 30, 2003, was
$4.36 million with a pre-tax loss of $1.41 million or $0.07 loss per
share diluted. This compares to a pre-tax loss of $ 1.76 million or
$0.08 loss per share diluted on revenue of $4.4 million for the second
fiscal quarter ended August 31, 2003.
During the fiscal third quarter, the Company recorded a non-cash
charge of approximately $6 million to establish a valuation allowance
against its deferred tax assets. This was in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109 ("Accounting for
Income Taxes"), and related to the reversal of the tax benefit.
Also during the quarter, the Company reversed a $750,000
litigation reserve previously booked in the second quarter of fiscal
year 2003. This reserve was reversed based on a favorable judgment
issued in September in the patent case. Additionally, as the core
stacking business decreased, the Company recognized a non-cash reserve
of $530,000 for the anticipated sale of certain equipment no longer
being utilized. The net loss after tax for the quarter, including the
above items, was $7.42 million or $0.35 loss per share diluted, which
included a loss of $0.28 per share for the tax charge.
"The reversal of the income tax benefit was caused by the current
losses, as the Company is placing greater weight on previous
cumulative losses than the outlook for future profitability when
determining whether deferred tax assets can be used," said Kim Early,
interim CEO and director of DPAC Technologies. "The quarter's results
were also adversely impacted by production start-up difficulties in
the introduction of our Durastack product line, which is limiting our
revenue generating capability in the memory stacking business."
Mr. Early continued, "With the recent resignation of Ted Bruce, I
am fully engaged with the management of the company and the forward
strategy of the wireless product. The recent success of our wireless
product design wins is an indication of our future potential and the
sense of urgency that we are addressing to be successful. Initial
customer response to the Airborne(TM) 802.11b wireless module have
been very successful on a design-in basis, but while this is exciting,
our customers' success with their system development and sales will
determine our final success into this market."
"Our quarterly results reflect the investments into the wireless
marketplace and the decreasing revenue and contribution margin from
the core stacking business. On an additional note, DPAC will book a
reserve of approximately $1.1 million during the fourth quarter ended
February 28, 2004 in severance related expenses, which will be paid
over the next two and one half years," Mr. Early added.
Management of DPAC will host a conference call today at 10:30 a.m.
Pacific/1:30 p.m. Eastern to discuss the second quarter operating
performance. The conference call will feature interim CEO Kim Early
and Chief Financial Officer William Stowell. To participate on the
live call, please dial 888-792-1093. A phone replay will be available
for 48 hours (beginning two hours after the completion of the
conference call) by dialing 888-266-2081 and entering the pass code
351197.
About DPAC Technologies
Located in Garden Grove, California, DPAC Technologies provides a
diverse portfolio of patented electronic-component-based products
including component packaging technology for high-density,
space-saving memory and wireless applications, and solutions for
digital image enhancement. DPAC's products are used in electronic
circuits found in network servers, computer storage devices, weapon
guidance systems, medical instrumentation, communication devices,
refrigeration controls, automotive diagnostic equipment and other
advanced equipment. The Company also provides value-added
manufacturing of prototype designs and medium volume production runs
of assembled circuit boards. The Company's web site address is
http://www.dpactech.com.
Forward-Looking Statements
This press release includes forward-looking statements, including
statements regarding management's current beliefs concerning the
Company. Every statement herein that is not historic in nature is a
forward-looking statement for purposes of the Safe Harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward
looking statements involve risks and uncertainties, and therefore
results may differ materially from those set forth in these
statements. Factors that affect DPAC's business include; but are not
limited to, the market acceptance of new products, future business
opportunities with products, competition in the semiconductor market,
protection of technology or proprietary rights, rapid technological
change, risks of litigation, and general market and economic
conditions. More information about the risks and challenges faced by
DPAC Technologies Corp. is contained in the Securities and Exchange
Commission filings made by the Company on Form 10-K, 10-Q and 8-K.
DPAC Technologies Corp. specifically disclaims any obligation to
update or revise any forward-looking statements whether as a result of
new information, future developments or otherwise.
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Balance Sheet Information
(Unaudited)
(In 000's)
November 30, February 28,
2003 2003
Cash $5,669 $8,197
Current assets 8,214 12,557
Fixed assets, net 3,295 3,863
Goodwill 4,529 4,529
Deferred income taxes-LT -- 4,554
Other assets 581 250
Total assets $16,619 $25,753
Current liabilities $2,103 $2,257
Long-term debt 295 99
Shareholders' equity 14,221 23,397
Total liabilities and
shareholders' equity $ 16,619 $ 25,753
DPAC TECHNOLOGIES CORP.
Condensed Statements of Income
(Unaudited)
(in 000's, except per share data)
For Periods Ended November 30
Third Quarter Nine Months
2003 2002 2003 2002
Sales $4,363 $5,421 $13,927 $28,241
Cost of sales 3,972 3,963 11,974 21,039
Production equipment
impairment loss 530 -- 530 --
Gross profit (loss) (139) 1,458 1,423 7,202
Sales, general &
administrative costs 1,286 1,350 3,850 4,603
Research and development 744 465 2,270 1,369
Reserve for litigation (750) -- -- --
Total operating costs 1,280 1,815 6,120 5,972
Income (loss) from operations (1,419) (357) (4,697) 1,230
Other income 6 8 20 33
Income (loss) before income
taxes (1,413) (349) (4,677) 1,263
Income tax benefit (provision) (6,004) 142 (4,764) 1,587
Net income (loss) $(7,417) $(207) $(9,441) $2,850
EPS -- Basic $(0.35) $(0.01) $(0.45) $0.14
EPS -- Diluted $(0.35) $(0.01) $(0.45) $0.13
Basic Shares 21,170 21,007 21,073 21,018
Diluted Shares 21,170 21,007 21,073 21,335
CONTACT: DPAC Technologies Corp.
William M. Stowell, 714-898-0007
William.Stowell@dpactech.com
www.dpactech.com